Navigating Retirement

                 Larry Root Senior Volunteer Recognition Award

       Michael Lamb is the recipient of the 2024 Larry Root Award for excellence in volunteering on issues impaction retirees. His volunteer accomplishments include:

•       12 years served on the Elder Abuse Prevention London    
•       Volunteered as legal advisor for Ark Aid
•       2016 recipient of the Brian Young Award by the London Police Service for advocating for seniors     

        Larry Root was a passionate advocate on senior's issues. Navigating Retirement is honoured to continue his legacy by naming the volunteer recognition award after Larry.

      The Liberals made a commitment to seniors in their 2025 election campaign that withdrawals from Registered Retirement Income Funds could be reduced by 25% in calendar 2025. Despite the pledge, the recent federal budget did not refer to the proposed RRIF reduction. As a result, it appears the proposal will not be enacted for 2025.

    It is recommended that the government enact legislation to provide a one-year reduction in RRIF withdrawal rates. If no action is taken on this matter, the government should provide relief to seniors who may suffer a financial penalty for acting in good faith on the Liberal election promise.

With a new leader of the Liberal Party, many seniors had a renewed sense of optimism that promises made will be promises kept. Many seniors who acted on the election promise may suffer a financial penalty and the government has not offered any relief to these taxpayers who acted in good faith. The most vulnerable group is seniors whose RRIF only contains fixed-income products, such as Guaranteed Income Certificates. 

Consider the following example:

- A senior’s RRIF only contains GICs

- Before the government pledge, the minimum withdrawal was $50,000

- In May 2025, the senior acted on the election promise and withdrew $37,500 ($50,000 X 75%) from her RRIF and rolled over the remaining cash into a one-year GIC that cannot be cashed for 12 months

Senior’s Issue – Since all of the assets in the RRIF are invested in GICs that mature in 2026 and beyond, there is no available cash to withdraw the additional $12,500. This creates two potential problems:

1) The cash is tied up and the bank may be under no obligation to cash a GIC before the 2026 maturity date to raise the necessary cash. If they make the option available, the senior will probably be assessed a financial penalty

2) If the senior is unable to free up the necessary cash within the RRIF to make the minimum required withdrawal, she will be subject to adverse consequences by CRA. The $50,000 would be subject to tax, even though only $37,500 was withdrawn. This may have an impact on the senior’s quarterly installment requirements. 

Recommendations – Seniors who acted in good faith on a Liberal Party promise should not be subject to the frustration of being in non-compliance with the law and subject to potential adverse financial costs from either CRA and/or their financial institution. 

It is recommended that the Liberals keep their pledge to reduce RRIF withdrawals by 25% for 2025 so seniors can avoid the potential adverse tax and financial consequences of an inability to make the appropriate withdrawals. 

Navigating Retirement

Don Pollock

President

CA/CPA/HBA

2024 Mayor’s Honours List Recipient in the Category - Age-Friendly
don.pollock@sympatico.ca

Navigatingretirement010@google.com